Prostate Cancer Treatment Costs Can Differ by 400 Percent. Here’s Why

The body of evidence that prices for medical and hospital treatment in the United States are all over the map is growing:

UCLA researchers have for the first time described cost across an entire care process for a common condition called benign prostate hyperplasia (BPH) using time-driven activity-based costing. They found a 400 percent discrepancy between the least and most expensive ways to treat the condition.

The finding takes on even further importance as there isn’t any proven difference in outcomes between the lower and higher cost treatments, said study first author Dr. Alan Kaplan, a resident physician in the UCLA Department of Urology.

“The rising cost of health care is unsustainable, and a big part of the problem is that health systems, health care providers and policy makers have a poor understanding of how much health care really costs,” Kaplan said. “Until this is well understood, taxpayers, insurers and patients alike will continue to bear the burden of soaring health care costs.” (UCLA Health)

From the study itself: “Although listed as ‘optional’ in practice guidelines, invasive diagnostic testing can increase costs by 150% compared with the standalone urology clinic visit. Of five different surgical options, a 400% cost discrepancy exists between the most and least expensive treatments.”

We know why this happens: Patients are not involved in forming prices in U.S. health care. Until the marginal patient transacts with the marginal provider, no effective price formation can take place.

One solution is price transparency. Another is reference pricing. Both consist of health plans giving patients some role in price formation. Yet, these measures remain idiosyncratic. Why they are not yet the norm is a continuing challenge for U.S. health care.